As every real estate investor knows, there are a lot of different property types that can be bought, renovated, and resold for profit. In this article, we’re going to talk specifically about the advantages of flipping condos, and what types of investors might really benefit from incorporating this activity into their investment strategy. Even if you’re a seasoned investor, flipping condos has its perks – if you’re just getting started, you might want to especially pay attention to some of the items that follow.
Less Investor/Landlord Competition in Condo Associations
Your mileage may vary depending on your location, but typically speaking, investors seeking to buy & rehab condos face less competition from other investors than those who primarily target single-family homes. Condos are not always an obvious choice for investors, as the lower per-unit price in comparison to a single family home can make single family homes more attractive on paper. But, condos are often much smaller than single-family homes, and depending on the condo association bylaws, owners may not be responsible for any external appearance of the building, meaning the only portion of the property that needs to be renovated is the interior.
That said, many condo associations also have bylaws against non-owner occupancy, meaning that investors are not allowed to rent out the units that they purchase and instead need to sell them. If flipping is your preference, this doesn’t present an issue. But buying and holding condos require less strict association rules.
Condos Require Fewer Renovations (Usually)
Like we said above, condo owners are not typically responsible for maintaining external appearances within condo associations. This usually means no maintenance required for roofing, siding, or the foundation – in some cases, this can even extend to the water heater and HVAC systems. Often, condo projects are primarily aesthetic updates to kitchens and bathrooms, and perhaps replacing carpet with hardwood flooring or whatever may be trending to increase the allure of the property. With that in mind, condos could be ideal projects for investors who would prefer to avoid extensive rehab projects.
Are There Any Downsides to Flipping Condos?
Ultimately, despite the advantages listed above, there are going to be some factors you’ll want to keep an eye out for. Make sure before purchasing a condo that you’ve reviewed the condo association’s bylaws, and that you fully understand the terms therein. In many cases, there are monthly, quarterly, and/or annual fees associated with condo ownership that you’ll want to build into your financial plan. These fees are also not necessarily set in stone.
In addition, some condo associations place strict limits on the types of renovations you can complete. Wherever you’re buying, you’ll want to make sure that you’re free and clear of any special assessment fees for breaking association bylaws relating to appearance or renovation restrictions.
It’s Relatively Easy to Fund a Fix & Flip for a Condo
There are a lot of options for financing a condo purchase. If you can meet the requirements and are willing to be patient, you can finance traditionally through a bank. You could even complete a live-in rehab project with the aid of an FHA loan and sell the condo at a later time for a profit. But, if you’re strictly investing and you’re looking for a quick turnaround on approval and funding, seeking a hard money loan from a private lender like Pimlico Capital might be your best option.
If you’re planning a condo project, make sure to give us a call at 410-855-4600, or visit our rate calculator to get a quote instantly after entering a few property details!